Lifetime ISA Rules for First-Time Buyers: What’s Changing?

The Lifetime ISA (LISA) remains the account first-time buyers can use under current rules. The government has consulted on a First Time Buyer ISA as a simpler, home-buying-focused alternative, but the consultation is closed and the replacement is not yet available. Its final terms and launch date have not been confirmed in the cited government information. 16

Current Lifetime ISA rules for buying a home

You must make your first LISA payment before turning 40. You can contribute up to £4,000 per tax year until age 50, and the government adds a 25% bonus—up to £1,000 a year. A LISA can hold cash or investments. 1518

To use LISA funds and the bonus for a first home, the account must have received its first payment at least 12 months before the purchase. The home must cost no more than £450,000, you must intend to live in it, and the purchase must be made with a mortgage. A conveyancer or solicitor must handle the purchase. The £450,000 limit applies to the full property price, not just the share bought in a shared-ownership purchase. 791113

A LISA can also be used for retirement: withdrawals are permitted from age 60. But using the money for another reason usually triggers a 25% withdrawal charge on the amount taken out. That charge can reduce your original savings as well as remove the benefit of the bonus. 915

Why the government is proposing a replacement

The LISA combines first-home saving with retirement saving, and its withdrawal charge can make it costly to change plans. The government has described its proposal as a simpler account for first-time buyers, with the bonus tied to a qualifying home purchase rather than paid into the account as contributions are made. The stated aim is to give savers more flexibility if they need to access their own savings for another reason. 13

How the proposed First Time Buyer ISA could differ

These are proposals, not rules you can use today. The consultation describes a product for first-time buyers, with eligibility intended to start at age 18 and no upper age limit. Unlike the LISA, it would be focused on buying a first home rather than also serving as a retirement account. 1

The proposed bonus would be claimed when the saver buys an eligible home, rather than added along the way to each contribution. The proposal also aims to let savers withdraw their own savings without the LISA’s 25% charge. A 12-month period after opening the account was part of the proposed purchase conditions. 13

The final savings options are not settled in the information available here. A LISA can hold cash or investments, but buyers should not assume that the replacement will offer the same choices. Similarly, the final bonus rate, contribution limits and property-price cap have not been confirmed. The existing LISA’s £4,000 annual contribution limit, 25% bonus and £450,000 home-price limit should not be treated as confirmed terms for the new account. 115

What conveyancers do—and what may change

With a LISA home purchase, the provider releases the money through the conveyancer or solicitor. The conveyancer checks the required purchase declarations and must return the funds if the purchase does not proceed within the permitted period, subject to the applicable rules. 717

The proposed account does not remove conveyancers from the process. The consultation treats them as part of checking and completing a qualifying purchase so the bonus can be claimed. The precise operating requirements will depend on the final rules. 1

What is still undecided

The government’s consultation ran from 22 June to 18 August 2026 and is now closed. A closed consultation is not the same as a launched account: the available government information does not confirm a launch date or final product terms. 61

The detailed bonus, annual savings limit, eligible property-price ceiling and permitted savings options remain uncertain. Existing LISA holders can continue saving under the current rules while the replacement is not available; do not assume a particular transfer route or that the proposed account will change the terms of money already in a LISA. 13

What first-time buyers should do now

Make decisions using the current LISA rules, not the proposed account. If a LISA suits your likely purchase price and timeline, opening one can start the 12-month waiting period. Keep money you may need for other purposes outside the account, because a non-qualifying withdrawal usually incurs the 25% charge. 915

If you already have a LISA, avoid withdrawing or moving it on the assumption that the replacement is available or that a particular transition arrangement will apply. Check the final government rules once they are published before changing your savings plan. 1